A Woman’s Guide to Successful Salary Negotiation

The salary gap between men and women may have as much to do with how the sexes approach salary negotiation as with gender politics.

By Lee E. Miller and Jessica Miller

EDITORS’ NOTE: This article is adapted from the just released “A Woman’s Guide to Successful Negotiating” (McGraw-Hill, 2010) by Lee E. Miller and Jessica Miller.

Early in her career, Maria Dorfner, CEO of NewsMD Communications, asked her mother for advice about salary negotiations. Her mom told her, “You need them more than they need you.” So, when she entered into her first salary negotiations, she “was afraid to ask for a penny.” After determining that wasn’t a particularly effective negotiating strategy, she decided to be more forceful in the future. So the next time she found herself negotiating salary, when she was asked, “How much do you want to make?” she replied with a number that was twice her then current salary. To her amazement, the individual she was negotiating with said simply, “You got it.” A year later, she learned that she could have asked for triple what she was earning, because that was what the guy next to her had asked for and had gotten. Maria, a communications and public relations executive, notes that she has “never taken a job for the money, but it hurts to feel taken advantage of. Negotiating compensation is about knowing your worth and being compensated fairly.” She adds: “Today, I know they need me more than I need them.”

A study of the job and salary negotiations of graduating professional school students at Carnegie Mellon University found that the male students were eight times more likely to negotiate a larger starting salary than female students. In part because women don’t negotiate compensation as often or as effectively, according to the Women in Management Report (pdf), released Sept. 28 by the Government Accountability Office, women managers still earn only 81 cents for every dollar their male counterparts earn, up only two cents from 10 years ago. It doesn’t have to be that way. Women who successfully master the art of negotiating earn more money and are more successful in their careers. In fact, for some women who have learned to negotiate effectively these statistics have been completely reversed. According to the most recent available census data, single, childless women between ages 22 and 30, in major metropolitan areas, now earn 8 percent more than their male counterparts.

Negotiating Isn’t Petty

One of the biggest mistakes women make is not negotiating compensation whenever they have an opportunity to do so. In researching our newly released book, “A Woman’s Guide to Successful Negotiating” (McGraw-Hill, 2010), we found that failing to negotiate compensation not only hurt women financially, it held them back in their careers. The highly successful female executives that we interviewed emphasized not only the importance of learning to negotiate, but also being willing to negotiate for themselves, not just their employers. Even women who are really good at negotiating for their organizations often feel that there is something unseemly about trying to get things for themselves; that demanding more money is petty. This leads them to accept the first salary offer or to ask for too little when they do negotiate.

Negotiating for a larger salary isn’t petty. The women who are most successful learn that negotiating about compensation is not only appropriate, but expected of them. Employers may actually think less of them if they do not negotiate. A potential employer may even become concerned that they will not be able to negotiate effectively with vendors, customers and peers if they are hired.

Employers expect all but entry-level hires (and, in recent years, sometimes even those) to negotiate. Therefore, they almost never start with their best offer — so women who fail to negotiate are probably accepting less than the employer was prepared to pay. This is true even in a weak economy. Even though it may be difficult to find a job when times are tough, once an employer decides you are the one they want to hire you are in a good position to negotiate.

Your Mistakes Are Following You

Failing to negotiate your salary from the start is not only an intial mistake; it is one that will continue to follow you and will be compounded over the years, disadvantaging you throughout the remainder of your career. Every raise you get, every bonus you receive and even the number of stock options you are awarded, will be smaller because these amounts are normally determined as a percentage of your artificially low base salary.

Many women think they will accept a job, prove themselves and then ask for a raise. This approach may result from believing that they are not in a position to negotiate; from being afraid that if they ask for more, they might lose the job offer; from being uncomfortable negotiating; or simply from thinking that proving their worth before negotiating is the most effective approach. Whatever the reason, in most instances, they will be wrong. Once you prove yourself in a job, you will be able to get even more money, over and above what you negotiate at the time you initially accept a job. By not negotiating at the outset, you are not only forgoing the money you could have gotten but also reducing the amount of the raise you will get after you prove yourself. Imagine that initially you could have negotiated a salary $5,000 more than the one you accepted without negotiating. When you get that 10 percent raise because of the great job you have done, it will be based on the lower, nonnegotiated salary—and will be $500 less than it would have been if you had negotiated in the first place. Moreover, that hard-earned first raise will still leave you earning $5,500 less than if you had originally negotiated, and then received the raise you deserve.

When negotiating compensation, the only way to be certain that you get what you deserve is to know your worth in the marketplace, to understand how to negotiate compensation, to firmly and creatively negotiate a compensation package consistent with your market value and be willing to walk away if you do not get it.